X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the period ended December 29, 2012

or

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 0-14616

J & J SNACK FOODS CORP.

(Exact name of registrant as specified in its charter)

New Jersey

22-1935537

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

6000 Central Highway, Pennsauken, NJ 08109

(Address of principal executive offices)

Telephone (856) 665-9533

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

X

Yes

No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

X

Yes

No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated filer (X)

Accelerated filer ( )

Non-accelerated filer ( )

Smaller reporting company ( )

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

X

No

As January 21, 2013, there were 18,797,826 shares of the Registrant’s Common Stock outstanding.

Changes in assets and liabilities net of effects from purchase of companies

Decrease in accounts receivable

9,787

19,112

Increase in inventories

(6,994

)

(2,941

)

(Increase) decrease in prepaid expenses

(483

)

1,896

Decrease in accounts payable and accrued liabilities

(3,781

)

(10,640

)

Net cash provided by operating activities

17,262

20,668

Investing activities:

Purchases of property, plant and equipment

(7,481

)

(8,869

)

Purchases of marketable securities

(80,002

)

(37,454

)

Proceeds from redemption of marketable securities

240

33,310

Proceeds from disposal of property and equipment

261

102

Other

(37

)

(611

)

Net cash used in investing activities

(87,019

)

(13,522

)

Financing activities:

Payments to repurchase common stock

(2,763

)

-

Proceeds from issuance of stock

1,700

1,825

Payments on capitalized lease obligations

(88

)

(69

)

Payment of cash dividend

(3,004

)

(2,200

)

Net cash used in financing activities

(4,155

)

(444

)

Effect of exchange rate on cash and cash equivalents

(70

)

(90

)

Net (decrease) increase in cash and cash equivalents

(73,982

)

6,612

Cash and cash equivalents at beginning of period

154,198

87,479

Cash and cash equivalents at end of period

$

80,216

$

94,091

See accompanying notes to the consolidated financial statements.

6

J & J SNACK FOODS CORP. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1 In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position nd the results of operations and cash flows. Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no effect on reported net earnings.

The results of operations for the three months ended December 29, 2012 and December 24, 2011 are not necessarily indicative of results for the full year. Sales of our frozen beverages and frozen juice bars and ices are generally higher in the third and fourth quarters due to warmer weather.

While we believe that the disclosures presented are adequate to make the information not misleading, it is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and the notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 29, 2012.

Note 2 We recognize revenue from our products when the products are shipped to our customers. Repair and maintenance equipment service revenue is recorded when it is performed provided the customer terms are that the customer is to be charged on a time and material basis or on a straight-line basis over the term of the contract when the customer has signed a service contract. Revenue is recognized only where persuasive evidence of an arrangement exists, our price is fixed or estimable and collectability is reasonably assured. We record offsets to revenue for allowances, end-user pricing adjustments, trade spending, coupon redemption costs and returned product. Customers generally do not have the right to return product unless it is damaged or defective. We provide an allowance for doubtful receivables after taking into consideration historical experience and other factors. The allowance for doubtful receivables was $987,000 and $685,000 at December 29, 2012 and September 29, 2012, respectively.

Note 3 Depreciation of equipment and buildings is provided for by the straight-line method over the assets’ estimated useful lives. Amortization of improvements is provided for by the straight-line method over the term of the lease or the assets’ estimated useful lives, whichever is shorter. Licenses and rights, customer relationships and non compete agreements arising from acquisitions are amortized by the straight-line method over periods ranging from 3 to 20 years. Depreciation expense was $6,790,000 and $6,357,000 for the three months ended December 29, 2012 and December 24, 2011, respectively.

7

Note 4 Basic earnings per common share (EPS) excludes dilution and is computed by dividing income available to common shareholders by the weighted average common shares outstanding during the period. Diluted EPS takes into consideration the potential dilution that could occur if securities (stock options) or other contracts to issue common stock were exercised and converted into common stock. Our calculation of EPS is as follows:

Three Months Ended December 29, 2012

Income

Shares

Per Share

(Numerator)

(Denominator)

Amount

(in thousands, except per share amounts)

Basic EPS

Net Earnings available to common stockholders

$

10,226

18,807

$

0.54

Effect of Dilutive Securities

Options

-

63

-

Diluted EPS

Net Earnings available to common stockholders plus assumed conversions

$

10,226

18,870

$

0.54

Three Months Ended December 24, 2011

Income

Shares

Per Share

(Numerator)

(Denominator)

Amount

(in thousands, except per share amounts)

Basic EPS

Net Earnings available to common stockholders

$

5,485

18,806

$

0.29

Effect of Dilutive Securities

Options

-

68

-

Diluted EPS

Net Earnings available to common stockholders plus assumed conversions

$

5,485

18,874

$

0.29

8

Note 5 At December 29, 2012, the Company has three stock-based employee compensation plans. Share-based compensation was recognized as follows:

Three months ended

December 29,

December 24,

2012

2011

(in thousands, except per share amounts)

Stock Options

$

175

$

95

Stock purchase plan

92

65

Stock issued to outside directors

12

-

Restricted stock issued to an employee

4

-

$

283

$

160

Per diluted share

$

0.01

$

0.01

The above compensation is net of tax benefits

$

224

$

134

The Company anticipates that share-based compensation will not exceed $1.2 million net of tax benefits, or approximately $.06 per share for the fiscal year ending September 28, 2013.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes options-pricing model with the following weighted average assumptions used for grants in fiscal 2013 first three months: expected volatility of 26%; risk-free interest rate of .67%; dividend rate of .9% and expected lives of 5 years.

During the 2013 three month period, the Company granted 1,100 stock options. The weighted-average grant date fair value of these options was $12.24. During the 2012 three month period, the Company granted 1,500 stock options. The weighted-average grant date fair value of these options was $11.62.

Expected volatility is based on the historical volatility of the price of our common shares over the past 55 months for 5 year options and 10 years for 10 year options. We use historical information to estimate expected life and forfeitures within the valuation model. The expected term of awards represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. Compensation cost is recognized using a straight-line method over the vesting or service period and is net of estimated forfeitures.

9

Note 6 We account for our income taxes under the liability method. Under the liability method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates that will be in effect when these differences reverse. Deferred tax expense is the result of changes in deferred tax assets and liabilities.

Additionally, we recognize a liability for income taxes and associated penalties and interest for tax positions taken or expected to be taken in a tax return which are more likely than not to be overturned by taxing authorities (“uncertain tax positions”). We have not recognized a tax benefit in our financial statements for these uncertain tax positions.

The total amount of gross unrecognized tax benefits is $510,000 and $541,000 on December 29, 2012 and September 29, 2012, respectively, all of which would impact our effective tax rate over time, if recognized. We recognize interest and penalties related to income tax matters as a part of the provision for income taxes. As of December 29, 2012 and September 29, 2012, respectively, the Company has $287,000 and $284,000 of accrued interest and penalties.

In addition to our federal tax return and tax returns for Mexico and Canada, we file tax returns in all states that have a corporate income tax with virtually all open for examination for three to four years.

Note 7 In June 2011, the FASB issued guidance which gives us the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In both options, we are required to present each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. This guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders' equity. The amendments in this guidance do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income. This guidance was adopted in our fiscal year 2013 first quarter and did not have a material impact on our financial statements.

10

Note 8 Inventories consist of the following:

December 29,

September 29,

2012

2012

(unaudited)

(in thousands)

Finished goods

$

36,884

$

32,439

Raw Materials

16,927

14,584

Packaging materials

6,348

5,985

Equipment parts & other

16,696

16,753

$

76,855

$

69,761

The above inventories are net of reserves

$

3,943

$

3,883

Note 9 We principally sell our products to the food service and retail supermarket industries. Sales and results of our frozen beverages business are monitored separately from the balance of our food service business because of different distribution and capital requirements. We maintain separate and discrete financial information for the three operating segments mentioned above which is available to our Chief Operating Decision Makers.

We have applied no aggregation criteria to any of these operating segments in order to determine reportable segments. Our three reportable segments are Food Service, Retail Supermarkets and Frozen Beverages. All inter-segment net sales and expenses have been eliminated in computing net sales and operating income (loss). These segments are described below.

Food Service

The primary products sold by the food service group are soft pretzels, frozen juice treats and desserts, churros, dough enrobed handheld products and baked goods. Our customers in the food service industry include snack bars and food stands in chain, department and discount stores; malls and shopping centers; fast food outlets; stadiums and sports arenas; leisure andtheme parks; convenience stores; movie theatres; warehouse club stores; schools, colleges and other institutions. Within the food service industry, our products are purchased by the consumer primarily for consumption at the point-of-sale.

We sell frozen beverages and related products to the food service industry primarily under the names ICEE, SLUSH PUPPIE, PARROT ICE and ARCTIC BLAST in the United States, Mexico and Canada. We also provide repair and maintenance service to customers for customers’ owned equipment.

The Chief Operating Decision Maker for Food Service and Retail Supermarkets and the Chief Operating Decision Maker for Frozen Beverages monthly review detailed operating income statements and sales reports in order to assess performance and allocate resources to each individual segment. In addition, the Chief Operating Decision Makers review and evaluate depreciation, capital spending and assets of each segment on a quarterly basis to monitor cash flow and asset needs of each segment. Information regarding the operations in these three reportable segments is as follows:

Three months ended

December 29,

December 24,

2012

2011

(unaudited)

(in thousands)

Sales to External Customers:

Food Service

Soft pretzels

$

32,594

$

25,617

Frozen juices and ices

7,527

7,852

Churros

13,807

10,386

Handhelds

6,314

6,414

Bakery

68,305

60,820

Other

1,640

1,980

$

130,187

$

113,069

Retail Supermarket

Soft pretzels

$

8,578

$

8,134

Frozen juices and ices

6,470

7,080

Handhelds

6,313

5,881

Coupon redemption

(789

)

(757

)

Other

131

496

$

20,703

$

20,834

Frozen Beverages

Beverages

$

25,297

$

23,981

Repair and maintenance service

11,842

11,543

Machines sales

3,048

2,913

Other

331

346

$

40,518

$

38,783

Consolidated Sales

$

191,408

$

172,686

Depreciation and Amortization:

Food Service

$

4,509

$

4,200

Retail Supermarket

8

5

Frozen Beverages

3,470

3,365

$

7,987

$

7,570

Operating Income (loss):

Food Service

$

12,597

$

7,254

Retail Supermarket

1,570

1,824

Frozen Beverages

894

(615

)

$

15,061

$

8,463

Capital Expenditures:

Food Service

$

5,260

$

6,313

Retail Supermarket

-

-

Frozen Beverages

2,221

2,556

$

7,481

$

8,869

Assets:

Food Service

$

460,524

$

406,275

Retail Supermarket

6,090

4,087

Frozen Beverages

139,624

134,933

$

606,238

$

545,295

12

Note 10 Our three reporting units, which are also reportable segments, are Food Service, Retail Supermarkets and Frozen Beverages.

The carrying amounts of acquired intangible assets for the Food Service, Retail Supermarkets and Frozen Beverage segments as of December 29, 2012 and September 29, 2012 are as follows:

December 29, 2012

September 29, 2012

Gross

Gross

Carrying

Accumulated

Carrying

Accumulated

Amount

Amortization

Amount

Amortization

(in thousands)

FOOD SERVICE

Indefinite lived intangible assets

Trade Names

$

12,880

-

$

12,880

$

-

Amortized intangible assets

Non compete agreements

545

461

545

456

Customer relationships

40,187

23,483

40,187

22,582

License and rights

3,606

2,543

3,606

2,519

$

57,218

$

26,487

$

57,218

$

25,557

RETAIL SUPERMARKETS

Indefinite lived intangible assets

Trade Names

$

4,006

$

-

$

4,006

$

-

Amortized Intangible Assets

Customer relationships

279

39

279

31

$

4,285

$

39

$

4,285

$

31

FROZEN BEVERAGES

Indefinite lived intangible assets

Trade Names

$

9,315

$

-

$

9,315

$

-

Amortized intangible assets

Non compete agreements

198

198

198

198

Customer relationships

6,478

4,364

6,478

4,201

Licenses and rights

1,601

662

1,601

644

$

17,592

$

5,224

$

17,592

$

5,043

CONSOLIDATED

$

79,095

$

31,750

$

79,095

$

30,631

13

Amortized intangible assets are being amortized by the straight-line method over periods ranging from 3 to 20 years and amortization expense is reflected throughout operating expenses. No intangible assets were acquired in the three months ended December 29, 2012. Aggregate amortization expense of intangible assets for the three months ended December 29, 2012 and December 24, 2011 was $1,119,000 and $1,132,000, respectively.

Estimated amortization expense for the next five fiscal years is approximately $4,500,000 in 2013, $4,400,000 in 2014 and 2015 and $4,200,000 in 2016 and $1,700,000 in 2017. The weighted average amortization period of the intangible assets is 10.1 years.

Goodwill

The carrying amounts of goodwill for the Food Service, Retail Supermarket and Frozen Beverage segments are as follows:

Food

Service

Retail

Supermarket

Frozen

Beverages

Total

(in thousands)

Balance at December 29, 2012

$

39,115

$

1,844

$

35,940

$

76,899

There were no changes in the carrying amounts of goodwill for the three months ended December 29, 2012.

Note 11 We have classified our investment securities as marketable securities held to maturity and available for sale. The FASB defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the FASB has established three levels of inputs that may be used to measure fair value:

Level 1 Observable input such as quoted prices in active markets for identical assets or liabilities;

Level 2 Observable inputs, other than Level 1 inputs in active markets, that are observable either directly or indirectly; and

Level 3 Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions.

14

Marketable securities held to maturity and available for sale values are derived solely from level 1 inputs.

The amortized cost, unrealized gains and losses, and fair market values of our investment securities held to maturity at December 29, 2012 are summarized as follows:

Gross

Gross

Fair

Amortized

Unrealized

Unrealized

Market

Cost

Gains

Losses

Value

(in thousands)

US Government Agency Debt

$

24,998

$

74

$

11

$

25,061

Certificates of Deposit

976

1

-

977

$

25,974

$

75

$

11

$

26,038

The amortized cost, unrealized gains and losses, and fair market values of our investment securities available for sale at December 29, 2012 are summarized as follows:

Gross

Gross

Fair

Amortized

Unrealized

Unrealized

Market

Cost

Gains

Losses

Value

(in thousands)

Mutual Funds

$

80,000

$

159

$

130

$

80,029

$

80,000

$

159

$

130

$

80,029

The mutual funds seek current income with an emphasis on maintaining low volatility and overall moderate duration.

All of the certificates of deposit are within the FDIC limits for insurance coverage.

The amortized cost, unrealized gains and losses, and fair market values of our investment securities held to maturity at September 29, 2012 are summarized as follows:

Gross

Gross

Fair

Amortized

Unrealized

Unrealized

Market

Cost

Gains

Losses

Value

(in thousands)

US Government Agency Debt

$

24,998

$

126

$

-

$

25,124

Certificates of Deposit

1,214

-

-

1,214

$

26,212

$

126

$

-

$

26,338

All of the certificates of deposit are within the FDIC limits for insurance coverage.

15

The amortized cost and fair value of the Company’s held to maturity securities by contractual maturity at December 29, 2012 and September 29, 2012 are summarized as follows:

December 29, 2012

September 29, 2012

Fair

Fair

Amortized

Market

Amortized

Market

Cost

Value

Cost

Value

(in thousands)

Due in one year or less

$

976

$

977

$

1,214

$

1,214

Due after one year through five years

-

-

-

-

Due after five years through ten years

24,998

25,061

24,998

25,124

Total held to maturity securities

$

25,974

$

26,038

$

26,212

$

26,338

Less current portion

976

977

1,214

1,214

Long term held to maturity securities

$

24,998

$

25,061

$

24,998

$

25,124

Proceeds from the redemption and sale of marketable securities were $240,000 and $33,310,000 in the three months ended December 29, 2012 and December 24, 2011, respectively, with no gain or loss recorded. We use the specific identification method to determine the cost of securities sold.

Note 12 In May 2011, we acquired the frozen handheld business of ConAgra Foods. This business had sales of approximately $50 million over the prior twelve months to food service and retail supermarket customers and sales of $18.3 million in our 2011 fiscal year from the acquisition date.

In June 2012, we acquired the assets of Kim & Scott’s Gourmet Pretzels, Inc., a manufacturer and seller of a premium brand soft pretzel. This business had sales of approximately $8 million over the prior twelve months to food service and retail supermarket customers and had sales of approximately $1.8 million in our 2012 fiscal year from the acquisition date.

These acquisitions were and will be accounted for under the purchase method of accounting, and their operations are and will be included in the consolidated financial statements from their respective acquisition dates.

16

The purchase price allocation for the handhelds acquisition is as follows:

(in thousands)

Working Capital

$

6,955

Property, plant & equipment

11,036

Trade Names

1,325

Customer Relationships

207

Deferred tax liability

(4,137

)

Net Assets Acquired

15,386

Purchase Price

8,806

Gain on bargain purchase

$

6,580

The purchase price allocation resulted in the recognition of a gain on bargain purchase of approximately $6,580,000 which is included in other income in the consolidated statement of earnings for the three and nine months ended June 25, 2011. The gain on bargain purchase resulted from the fair value of the identifiable net assets acquired exceeding the purchase price.

Acquisition costs of $546,000 for the handhelds acquisition are included in other general expense in the consolidated statements of earnings for the year September 24, 2011.

The purchase price allocation for the Kim and Scott’s acquisition is as follows:

(in thousands)

Working Capital

$

(89

)

Property, plant & equipment

724

Trade Names

126

Customer Relationships

235

Non Compete Agreement

75

Goodwill

6,829

Purchase Price

$

7,900

Acquisition costs of $155,000 for the Kim & Scott’s acquisition are included in other general expense in the consolidated statements of earnings for the year ended September 29, 2012.

The goodwill and intangible assets acquired in the business combinations are recorded at fair value. To measure fair value for such assets, we use techniques including discounted expected future cash flows (Level 3 input).

17

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Liquidity and Capital Resources

Our current cash and cash equivalents balances and cash expected to be provided by future operations are our primary sources of liquidity. We believe that these sources, along with our borrowing capacity, are sufficient to fund future growth and expansion. See Note 11 to these financial statements for a discussion of our investment securities.

The Company’s Board of Directors declared a regular quarterly cash dividend of $.16 per share of its common stock payable on December 27, 2012, to shareholders of record as of the close of business on December 11, 2012.

In our fiscal year ended September 29, 2012, we purchased and retired 142,038 shares of our common stock at a cost of $8,167,125. All of the shares were purchased in the fourth quarter. Subsequent to September 29, 2012 and through October 31, 2012, we purchased and retired 48,255 shares of our common stock at a cost of $2,762,602. On November 8, 2012 the Company’s Board of Directors authorized the purchase and retirement of an additional 500,000 shares of the Company’s common stock.

In the three months ended December 29, 2012 and December 24, 2011, fluctuations in the valuation of the Mexican and Canadian currencies and the resulting translation of the net assets of our Mexican and Canadian subsidiaries caused an increase of $123,000 in accumulated other comprehensive loss in the 2013 first quarter and an increase of $156,000 in accumulated other comprehensive loss in the 2012 first quarter.

Our general-purpose bank credit line which expires in December 2016 provides for up to a $50,000,000 revolving credit facility. The agreement contains restrictive covenants and requires commitment fees in accordance with standard banking practice. There were no outstanding balances under this facility at December 29, 2012.

Results of Operations

Net sales increased $18,722,000 or 11% to $191,408,000 for the three months ended December 29, 2012 compared to the three months ended December 24, 2011.

Excluding sales resulting from the acquisition of Kim & Scott’s Gourmet Pretzels in June 2012, sales increased approximately 10% for the three months.

18

FOOD SERVICE

Sales to food service customers increased $17,118,000 or 15% in the first quarter to $130,187,000. Excluding Kim & Scott’s sales, food service sales increased approximately 14% for the quarter. Soft pretzel sales to the food service market increased 27% to $32,594,000 in the first quarter due to increased sales to restaurant chains, warehouse club stores and throughout our customer base. Increased sales to two customers accounted for approximately 50% of the increase in pretzel sales in the quarter. Without Kim & Scott’s, pretzel sales increased about 23%. Frozen juices and ices sales decreased 4% to $7,527,000 in the three months resulting from lower sales to school food service accounts partially offset by higher sales to warehouse club stores. Churro sales to food service customers increased 33% to $13,807,000 in the first quarter with sales to one restaurant chain accounting for 85% of the increase.

Sales of bakery products increased $7,485,000 or 12% in the first quarter to $68,305,000 as sales increases were spread throughout our customer base.

Sales of new products in the first twelve months since their introduction were approximately $4.8 million in this quarter. Price increases accounted for approximately $3.0 million of sales in the quarter and net volume increases, including new product sales as defined above and sales resulting from the acquisition of Kim & Scott’s, accounted for approximately $14.1 million of sales in the quarter.

Operating income in our Food Service segment increased from $7,254,000 to $12,597,000 in the quarter. Operating income for the quarter benefited from increased sales volume and price increases. Additionally, last year’s quarter was impacted by a management and sales meeting expense of about $550,000.

RETAIL SUPERMARKETS

Sales of products to retail supermarkets decreased $131,000 or less than 1% to $20,703,000 the first quarter. Excluding Kim & Scott’s sales, sales decreased 2% for the first quarter. Soft pretzel sales for the first quarter were up 5% to $8,578,000 on a unit volume increase of 6% for the quarter. Excluding Kim & Scott’s sales, soft pretzel sales increased about 2% for this quarter. Sales of frozen juices and ices decreased $610,000 or 9% to $6,470,000 in the first quarter on a unit volume decrease of 14% in this quarter. Coupon redemption costs, a reduction of sales, increased 4% or about $32,000 for the quarter. Handheld sales to retail supermarket customers increased 7% to $6,313,000 in the quarter.

Sales of new products in the first twelve months since their introduction were approximately $1.2 million in the first quarter. Price increases accounted for approximately $200,000 of sales in the quarter and net volume decreases, including new product sales as defined above and Kim & Scott’s sales and net of increased coupon costs, accounted for approximately $300,000 of the sales decrease in this quarter. Operating income in our Retail Supermarkets segment decreased from $1,824,000 to $1,570,000 in the quarter primarily because of increased allowances for the introduction of products into additional retailers, lower sales and increased advertising expenses.

19

FROZEN BEVERAGES

Frozen beverage and related product sales increased 4% to $40,518,000 in the first quarter. Beverage related sales alone were up 5% in the first quarter. Gallon sales were up 2% for the three months. Service revenue increased 3% to $11,842,000 in the first quarter with sales increases and decreases spread throughout our customer base.

Sales of beverage machines, which tend to fluctuate from year to year while following no specific trend, were $135,000 or 5% higher in the three month period. The approximate number of company owned frozen beverage dispensers was 42,700 and 42,500 at December 29, 2012 and September 29, 2012, respectively. Operating income in our Frozen Beverage segment was $894,000 in this year’s quarter compared to an operating loss of $615,000 last year. The improvement in operating results was from a combination of higher sales and a reduction of expenses. Last year’s quarter included a management and sales meeting expense of about $200,000.

CONSOLIDATED

Gross profit as a percentage of sales increased to 28.28% in the three month period from 26.87% last year. Higher volume in our food service segment was the primary reason for the improved gross profit margin. Ingredient and packaging costs can be extremely volatile and may be significantly different from what we are presently expecting and therefore we cannot project the impact of ingredient and packaging costs on our business going forward; however, there has been a very significant increase in the market cost of flour and packaging as well as lesser used ingredients over the past nine months which we anticipate will result in higher costs over the balance of our fiscal year, although there was no impact in our first quarter.

Total operating expenses increased $1,131,000 in this quarter but as a percentage of sales decreased from 22% percent to 20%. The drop in percentage was generally because of increased sales and lower expenses in our frozen beverage segment and the overall reduction of $800,000 in expense because of the management and sales meeting we had last year. Marketing expenses decreased from 10% of sales last year to 9% this year also because of higher sales and reduction of expenses. Distribution expenses were 8% of sales in both years’ quarter. Administrative expenses were 3.45% of sales this year compared to 3.51% of sales last year.

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Operating income increased $6,598,000 or 78% to $15,061,000 in the first quarter as a result of the aforementioned items.

Investment income increased by $421,000 in the quarter due primarily to increased investments of marketable securities. We invested $80 million in this quarter in mutual funds that seek current income with an emphasis on maintaining low volatility and overall moderate duration. We estimate yield from these funds to approximate 4%.

The effective income tax rate has been estimated at 35% and 38% for the quarter this year and last year, respectively. We are estimating an effective income tax rate of between 36 1/2% and 37% for the year. The first quarter benefitted from a reduction of tax expense because of changes in estimates related to a prior year.

Net earnings increased $4,741,000 or 86% in the current three month period to $10,226,000 as a result of the aforementioned items.

There are many factors which can impact our net earnings from year to year and in the long run, among which are the supply and cost of raw materials and labor, insurance costs, factors impacting sales as noted above, the continuing consolidation of our customers, our ability to manage our manufacturing, marketing and distribution activities, our ability to make and integrate acquisitions and changes in tax laws and interest rates.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There has been no material change in the Company’s assessment of its sensitivity to market risk since its presentation set forth, in item 7a. “Quantitative and Qualitative Disclosures About Market Risk,” in its 2012 annual report on Form 10-K filed with the SEC.

Item 4. Controls and Procedures

The Chief Executive Officer and the Chief Financial Officer of the Company (its principal executive officer and principal financial officer, respectively) have concluded, based on their evaluation as of December 29, 2012, that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports filed or submitted by it under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

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There has been no change in the Company’s internal control over financial reporting during the quarter ended December 29, 2012, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 6.

Exhibits

Exhibit No.

31.1

&

Certification Pursuant to Section 302 of

31.2

the Sarbanes-Oxley Act of 2002

99.5

&

Certification Pursuant to the 18 U.S.C.

99.6

Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101

The following financial information from J&J Snack Foods Corp.'s Quarterly Report on Form 10-Q for the quarter ended December 29, 2012, formatted in XBRL (eXtensible Business Reporting Language):

(i) Consolidated Balance Sheets,

(ii) Consolidated Statements of Earnings,

(iii) Consolidated Statements of Comprehensive Income,

(iv) Consolidated Statements of Cash Flows and

(v) the Notes to the Consolidated Financial Statements

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.